Strategic Management

DEFINITION & PHASES

The management of an org.’s resources to achieve its goals & objectives

Involves setting objectives, analyzing the internal org, evaluating strategies,

and ensuring that management rolls out the strategies across the org.

5 phases of Strategic Management:

1. First establish clear, realistic goals → identify the objectives, or how the
goals will be reached. During this phase, the company can articulate its
vision and long & short-term goals.

2. Examine, understand, and codify what internal & external forces affecting
the business & goals, and what is needed to remain competitive (using
analytical tools: SWOT, Porter’s 5 Forces,…) example

3. Based on the analysis → develop a strategy, and outline how the

company achieves goals. During this phase, identify the needed people,
tech, and other resources; how these resources will be allocated, and what
performance metrics needed to measure

4. Execution. During this phase, the allocated resources are placed into
action based on their roles & responsibilities.

5. Evaluate the effectiveness of implemented strategies using defined

metrics. Also, visit whether ineffective strategies should be replaced with
more viable ones; continue to monitor the business landscape & internal
operations + maintain the effective strategies.

NOTE:

Porter’s 5 Forces

1. Potential entrants ( threats: economies of scale, product differentiation,

capital requirement, switching costs, access to distribution channels, cost
disadvantages independent of scale)

2. Buyers (threat: bargaining power: force down the price, bargain for higher
quality or more services, play competitor against each other)

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 3. Suppliers (threat: bargaining power)

4. Substitutes (threat: The more attractive the price/performance ratio of

substitute products, the tighter the lid on an industry’s profits)

5. Industry competitors(threat: intensity of rivalry: tactics like price

competition, advertising battles, product introductions, and increased
customer service or warranties)

SWOT example: Bách Hóa Xanh Company

Strengths:
- Competitive price (comparatively at par with traditional market price, lower
price compared to another supermarket chain: winmarkt, co.op)
- easy & convenient to access (nearby traditional market, residential
community)
- discount + promotion programs
- diversified channel system (mortal-and-brick stores + online: more than
12,000 diverse products, clear origin, transparent prices)
- bring customers a good experience (online website aggregates news,
family tips, recipes,…)
- Financial support + reputation of its parent: Mobile World Group

Weakness:
- have not have stores in the northern region.
- limit the interaction bwt sellers and household wives (like in tradional
market)
- quality of fresh products is unstable
- no advanced tool in website like price comparison btw similar products

Opportunities:
- large spending on food & beverages in VN (35%/ total income)
- online shopping trends increase strongly
- green consumption trends in VN (customers are willing to pay more for
brands with a commitment to green and clean, products with clear origin,
and quality.

Threats
- fierce competition
- consumer cut spending on most non-essential items (inflation,
unemployment)

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 - complex customer demographic in different generations
- difficulty in finding vendors and control product quality

BUSINESS-LEVEL STRATEGY
BUSINESS-LEVEL STRATEGY
3 types of corporate strategies: GROWTH, STABILITY, and RENEWAL

GROWTH
Goal: Expands the number of markets served or products offered

Classification:

STABILITY
Maintain things as they are during periods of economic uncertainty

A company continues to do what it is currently doing

RENEWAL
Goal: address declining performance

Classification:

The 5 Generic Competitive Strategies

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 Distinguishing Features of the 5 Generic competitive
strategies

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 Industry Life Cycle Stages: Strategic Implications
1) Introduction Stage: the first stage of the industry life cycle characterized
by (1) new products that are not known to customers, (2) poorly defined
market segments, (3) unspecified product features, (4) low sales growth, (5)
rapid technological change, (6) operating losses, and (7) a need for financial
support;
2) Growth Stage: the second stage of the product life cycle characterized by
(1) strong increases in sales; (2) growing competition; (3) developing brand
recognition; and (4) a need for financing complementary value-chain activities
such as marketing, sales, customer service, and research and development;
3) Maturity Stage: the third stage of the product life cycle characterized by
(1) slowing demand growth, (2) saturated markets, (3) direct competition, (4)
price competition, and (5) strategic emphasis on efficient operations. Firms
are able to rescue products floundering in the maturity phase of their life
cycles and return them to the growth phase by:

Reverse Positioning: a break in industry tendency to continuously

augment products, characteristic of the product life cycle, by offering
products with fewer product attributes and lower prices;

Breakaway Positioning: a break in industry tendency to

incrementally improve products along specific dimensions,

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 characteristic of the product life cycle, by offering products that are still
in the industry but that are perceived by customers as being different;

4) Decline stage: the fourth stage of the product life cycle characterized by
(1) falling sales and profits, (2) increasing price competition, and (3) industry
consolidation. Four basic strategies are available in the decline phase:

Maintaining: refers to keeping a product going without significantly

reducing marketing support, technological development, or other
investments, in the hope that competitors will eventually exit the market;

Harvesting: involves obtaining as much profit as possible and requires

that costs be reduced quickly;

Exiting the market: involves dropping the product from a firm’s portfolio.
Since a residual core of consumers may still use the product, eliminating
it should be considered carefully;

Consolidation: involves one firm acquiring at a reasonable price the best

of the surviving firms in an industry. This enables firms to enhance market
power and acquire valuable assets.

INTERNATIONAL STRATEGY
The 4 different basic strategies n the global marketplace: International
Strategy, Global Strategy, Multidomestic Strategy, and Transnational Strategy.

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 Strategies Characteristics Strengths Limitations

- based on diffusions
[khuyếch tán] and
adaptation of the parent - Leverage and
company’s knowledge and diffusion of a parent - Limited ability to
expertise to foreign firm’s knowledge adapt to local
markets. - allowed to and core markets; - Inability
International
make some minor competencies; - to take advantage
Strategy
adaptations to products Lower costs of new ideas and
(starbuck o VN)
and ideas coming from the because of less innovations
head office, but far less need to tailor occurring in local
independence and products and markets.
autonomy compared to services.
multi-domestic
companies.

- Limited ability to
- Strong integration
adapt to local
- based on the emphasis across various
markets; -
on lowering costs. - is businesses; -
Concentration of
centralized and controlled Standardization
activities may
to a large extent by the leads to higher
increase
Global Strategy corporate office. - the economies of
dependence on a
(Intel) corporate office strives to scale, which lowers
single facility; -
achieve a strong level of costs; - Helps
Single locations
coordination and create uniform
may lead to higher
integration across the standards of quality
tariffs and
various businesses. throughout the
transportation
world.
costs.
- Decreased ability
- Ability to adapt
- based on the emphasis to realize cost
products and
on differentiating its savings through
services to local
products and service scale economies; -
market conditions; -
offerings to adapt to local Greater difficulty in
Multidomestic Ability to detect
markets. - tend to be transferring
Strategy (grab) potential
decentralized to permit the knowledge across
opportunities for
firm to tailor its products countries; - May
attractive niches in
and respond rapidly to lead to “over
a given market,
changes in demand. adaptation” as
enhancing value.
conditions change.

Transnational - to optimize the trade-offs - Ability to attain - Unique

Strategy (H&M) associated with efficiency, economies of challenges in
local adaption, and scale; - Ability to determining optimal

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 learning. - seeks efficiency adapt to local locations of
not for its own sage, but markets; - Ability to activities to ensure
as a means to achieve locate activities in cost and quality; -
global competitiveness. - optimal locations; - Unique managerial
recognizes the importance Ability to increase challenges in
of local responsiveness knowledge flows fostering
but as a toll for flexibility in and learning. knowledge transfer.
international operations.

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